What Employers with Self-Funded Plans Should Know About High-Value Claims

In a largely unpredictable world, some things are constants. Housing prices and college tuition will rise every year. So will healthcare costs. Each year, more and more Americans incur high-value medical claims in excess of $500,000. For self-insured employers to accurately plan ahead, it’s important to have some idea just how much and how quickly those major claims will rise. Stop Loss Insurance, Inc. has been tracking self-funding trends for our clients for many years. Back in 2014, we broke down data from Highmark, Inc. on high-value claims to help our clients understand the current landscape. Six years later, the numbers have changed but the trends remain the same. Here’s what you need to know.

High Value Claims: The Numbers

The number of high value claims have increased dramatically in just a handful of years. In 2019, HM Insurance Group (a subsidiary of Highmark) released annual high-value claims data going back to 2015, allowing us to update you on how these stats have changed. 

  •  $500,000 claims: In 2019, 67.7 out of every 100,000 employees had a claim exceeding $500,000, up from 37.1 in 2015. That’s a four-year increase of 82 percent, and an average annual percentage increase of 13 percent.
  •  $750,000 claims: In 2019, 22.9 out of every 100,000 employees had a claim exceeding $750,000, up from 13.8 in 2015. That’s a four-year increase of 66 percent, and an average annual percentage increase of 10 percent.
  •  $1 million claims: In 2019, 11 out of every 100,000 employees had a claim exceeding $1 million, up from 6.3 in 2015. That’s a four-year increase of 75 percent, and an average annual percentage increase of 8 percent.
  •  $1.5 million claims: In 2019, 3.9 out of every 100,000 employees had a claim exceeding $1.5 million, up from 2.3 in 2015. That’s a four-year increase of 70 percent, and an average annual percentage increase of 13 percent.
  •  $2 million claims: In 2019, 2.3 out of every 100,000 employees had a claim exceeding $2 million, up from 1.0 in 2015. That’s a four-year increase of 130 percent, and an average annual percentage increase of 21 percent.

How Many People Are Affected by Chronic Conditions?

This is an important point that self-insured employers need to understand.  In 2014 we shared that one in two American adults had a chronic health condition. Now, it’s six out of 10, and four out of every 10 have at least two chronic conditions. That means more people may require ongoing care to manage these needs.

Where High-Value Claims Come From

High-value claims are often a direct result of medical advancements. New cancer treatments and cutting-edge surgical procedures save patients with rare or aggressive conditions, but new or experimental treatments tend to have sky-high price tags. Injectable drug costs have also risen sharply in the last few years, and these treatments are often responsible for driving a patient’s claims over the $1 million mark.

While any number of medical conditions can lead to high-value claims, especially among patients with pre-existing conditions, there are a few top contenders that routinely cause these claims. In 2015, the top five diagnosis categories with claims exceeding $1 million were cancer, neonatal, circulatory diseases, injury and poisoning, and endocrine/metabolic diseases. In 2019, neonatal diagnoses took the top spot, representing about 21 percent of $1M+ claims. The top five list was rounded out by cancer, circulatory diseases, nervous system diseases and blood diseases.

Will conditions related to the COVID-19 pandemic affect high-value claim data in coming years? It’s too soon to tell, of course, but we can expect that some COVID patients who require prolonged hospitalizations could incur six-figure claims.

How to Protect Your Plan

A single high-value claim can put a lot of pressure on a self-funded plan, to say nothing of multiple claims incurred in a single plan year. Getting those claims reimbursed relieves the pressure. As we continue to see the biggest increases in the most expensive claims, shoring up your stop-loss insurance coverage has never been more important. High-value claims will continue to rise as medical advancements progress and more expensive treatments are approved for wide use. Knowing that, having your stop loss safety net firmly in place could protect a self-insured employer from financial disaster, in turn protecting all of your employees and their jobs.

Do you feel that your self-insured employer is ready for whatever claims its employees incur? Contact Stop Loss Insurance, Inc. to make sure all your bases are covered. Whether you’re thinking about buying new stop loss coverage or want to review your existing coverage, we’re always here to answer your questions.